In total, 76% of Americans say they’ve never used the payment apps PayPal, Venmo, Zelle, or Cash App. With the financial world becoming increasingly digital and advanced payment options available at your fingertips, it can be tricky to decide whether payment apps are a safe option.
Today we’ll discuss the basics of digital wallets and payment apps, including their safety. We’ll also give you tips on how to use them securely if you choose to.
Digital wallets are online payment tools that are usually in the form of an app. These digital wallets link a payment method like a debit card, credit card, or bank account to the vendor with which the transaction is being made. Digital wallets enable mobile payments and contactless in-store payments and are accepted at most retailers. They also allow you to transfer money to friends, family, and pay for purchases. A few examples of a digital wallet are:
Most mobile payment apps incorporate a number of safety and security features to protect your sensitive information. These features may include tokenization, encryption, two-factor authentication, or biometrics like a fingerprint or face ID. Almost every app also has a dedicated customer service team ready to help customers with any issues. For example, PayPal has a webpage dedicated to account protection, security, and fraud.
That being said, no payment app is 100% secure all of the time. Some payment apps are more prone to scams and safety shortcomings than others. To ensure your safety on these platforms, it’s important to be aware of the most common scams you could become a target of.
As safe as mobile payment apps are, fraud can still happen. Here are a few of the most common payment app scams to be on the lookout for:
Scammers will “accidentally” send you money using stolen funds, which will eventually be flagged as fraudulent and possibly in your name! Before they’re flagged, scammers will reach out and ask to have that money sent back. If a random person ever requests funds returned to them, contact the provider to take care of the matter before sending any funds.
You’ve probably seen this scam attempt using emails as well but now they make the plea to help them via payment apps. These are almost always scams and if you know the “friend” or “close relative of a friend”, you can easily verify by checking with the friend or relative yourself, separate from the actual request.
Some people use real business names as their fraudulent account or profile by changing a letter or two (this often happens with email scammers). Always look carefully at the spelling of the name before initiating payment.
Make sure to track your checking account either through mobile or online banking regularly. If you see an unauthorized payment, it may be due to payment app fraud. As always, if you see an unauthorized payment, report it immediately.
If you use mobile banking or payment apps, there are steps you can take to keep your payment information as safe as possible. Here are a few tips to safely use payment apps:
Think rationally about who you’re sending money to. Whether you’re trying to send money to a friend or a merchant, it’s important to make sure the receiver is who they say they are
QR code scanners are often embedded into apps to prevent the flawed human nature of typing a user’s name or profile incorrectly BUT if you’re unable to scan a code, be sure to triple check with the fund’s receiver that the account name you typed is correct.
There is a lot of sensitive info in a digital wallet. It’s important to protect all digital wallets with a strong password. Every password you create should include a combination of uppercase and lowercase characters, numbers, and special characters like exclamation marks.
Even with the best security features, scams can still happen on payment apps. If you think someone has gained access to your financial information or you’ve been scammed, contact both your financial institution and the Federal Trade Commission as soon as possible.
At Bank of the James, we’re committed to helping our customers develop a high level of financial literacy, including how to avoid scams. We’re also able and ready to provide resources to recover from already committed scams.
